Vietnam spends a third of green tax on environment

The government is considering another environmental fuel tax hike even though spending on the environment has barely kept pace.

Vietnam may almost triple an environmental protection duty imposed on fuel products from the current VND3,000 ($0.13) to VND8,000 per liter, according to a proposed amendment to the Environmental Protection Law prepared by the Ministry of Finance.

The ministry claims the tax increase aims to improve awareness of environmental protection, resulting in less consumption of goods that cause pollution.

However, while revenue from environmental tax has nearly quadrupled over the past five years, spending on environmental protection has only risen around 1.4 times.

In comparison with other countries in Southeast Asia, Vietnam’s gasoline prices are not very high. When it comes to affordability, meaning the percentage of a day’s minumum wages needed to buy gas, Vietnam stands among the most affordable.

The draft proposes a significant increase to the cost of gasoline and other refined oil products.

The tax details are as follows:

Product

Current rates (VND)

Proposed rates (VND)

Gasoline

1,000 - 4,000

3,000 - 8,000

Jet fuel

1,000 - 3,000

3,000 - 6,000

Diesel

500 - 2,000

1,500 - 4,000

Fuel oil

300 - 2,000

900 - 4,000

E5 (biofuel)

2,700 - 7,200

E10 (biofuel)

2,500 - 6,800

USD1 = VND22,720

Vietnam adjusted its environmental protection tax in 2010 and in 2015, and this most recent hike, if approved, would take effect in 2018.